Raineth Housing Frequently Asked Questions

What is Raineth Housing?

Raineth Housing is a family business currently operating in Cincinnati, Kansas City and St. Louis. Our mission is to directly address America’s affordable housing crisis by providing safe, clean, affordable single-family homes to working class people struggling to make ends meet. We’re proud of our record of transforming over one-thousand vacant dilapidated houses into inviting homes for families and individuals.

What types of housing does Raineth provide?

Raineth leases two- to four-bedroom, detached single-family homes, and we strive to keep rents low. Our homes, on average, rent for $725 per month.

Raineth follows Federal guidelines by measuring affordability at different percentages of family Adjusted Median Area Income, or “AMI.” (The adjustment standardizes affordability across different family sizes.) According to Federal standards, a family can afford to spend no more than 30 percent of its gross income on rent.

Seventy-eight percent of our homes are affordable to families who are at 50-percent of AMI, and 98-percent of our homes are affordable to families at 60-percent of AMI.

Is there an affordable housing crisis?

Sadly, the answer is a resounding “YES”. Harvard’s Joint Center for Housing Studies’ report on America’s rental housing revealed that 20.8 million American families are “moderately burdened.” In other words, these families spend between 30% and 49% of their income on housing – a level that exceeds Federal standards. Moreover, 11 million of these families are “severely burdened” because they spend more than 50% of their income on housing. Moderately and severely burdened families mean parents cannot afford healthy food for their children and decent healthcare. It means that mothers and fathers must live far from their places of work driving up commute time (and the related pollution and greenhouse gas emissions) and driving down child-rearing time.

Are the burdens of the affordable housing crisis concentrated among certain communities?

Sadly, the answer is again a resounding “YES”. Cost burdens are especially high among:

  • Low-income households: Most low-income households pay outsized shares of income for housing. Fully 80 percent of renters earning less than $30,000 were cost burdened (paid more than 30% of their income on housing) in 2016, including 55 percent with severe burdens (paid more than 50% of their income on housing).
  • Single-parent families with children: Single-parent families are the most likely to be cost burdened. Indeed, more than half of these households (53 percent) pay at least 30 percent of income for housing, reflecting the absence of multiple earners and the need for larger units. By comparison, less than a fifth (18 percent) of married households without children are cost burdened.
  • The young and the old: At one end of the spectrum, some 44 percent of households under age 30 are cost burdened. Most of these households have low incomes and are single-person or single-parent renters. At the other end, 54 percent of households age 65 and over that rent are burdened as well.
  • African-American and Hispanic households: Cost-burdened shares are also much higher among black (45 percent) and Hispanic households (43 percent) than among Asian and other minority households (36 percent) or white households (27 percent). Even among households within the same income groups, larger shares of minorities than whites are cost burdened. The cost-burdened rates for black and Hispanic households have also increased more rapidly in recent years than for other groups, rising 3 percentage points in 2001–2016 compared with 1 percentage point for white households and an even smaller uptick for Asian and other minority households.

Even if lack of affordable housing represents a national crisis, is it a problem in Raineth’s markets of Cincinnati, Kansas City and St. Louis?

Unfortunately, the lack of affordable housing represents a crisis throughout the United States including Raineth’s markets. As the below chart shows, Raineth’s markets suffer from the same affordability crisis as the nation and, in some cases, a problem more severe.

Proportion of Moderately and Severely Burdened Households at Different Income Levels: 2016

Will the affordable housing crisis get worse?

Sadly, “YES”. The below chart shows that between 1960 and 2016, the proportion of moderately and severely burdened tenants doubled from 24-percent to 48-percent.

Proportion of cost-burdened tenants

Since at least 1983, the number of cost burdened tenants who qualified for any kind of state or Federal housing assistance has dwarfed the number that received it. However, as the below table shows since 1995, the number that qualified for assistance has grown at more than three times the rate of those receiving assistance.

Qualifying Families Receiving Government Housing Assistance

Finally, the stock of houses that rent for less than $800 per month is declining while the number of tenants who can only afford to pay less than $800 is increasing. Much of the lost affordable housing occurs because not enough people are buying and restoring dilapidated houses. A Hudson Institute report finds that losses of low-cost units are high. About 60-percent of the 15 million rentals affordable in 1985—some 8.7 million units—were lost by 2013. The biggest reductions were due to permanent removals, with 27-percent of affordable rentals in 1985 (4.1 million units) demolished, destroyed in disasters, or reconfigured into fewer units. About 18-percent (2.7 million units) were converted to owner-occupied or seasonal housing, while 12-percent (1.7 million units) were upgraded to higher rents through gentrification. The remaining 276,000 units were temporarily out of the affordable stock*

How Does Raineth Address the Affordable Housing Crisis

Raineth acquires houses that require repair – those same affordable houses discussed above that would otherwise fall into disuse and eventual dilapidation. Raineth then rehabilitates these houses with significant investment and rents the homes to a low-income family. Raineth charges its tenants a low rent, on average $725 per month, and it invests over $400 of this rent each month back into the house in repair and maintenance, property taxes and insurance, and tenant service. Families that make only 50-percent of AMI can afford 78-percent of our houses, and families that make only 60-percent of AMI can afford 98-percent of our houses. We are proud of our record of providing over 1,000 safe, clean, affordable houses to our tenants.

What impact does Raineth have on its neighborhoods?

We have invested over $70 million in markets that other investors ignore and many of our partners – our contractors, our leasing agents and our property managers – live in these same neighborhoods. We preserve neighborhoods through two distinct mechanisms. First, we acquire vacant, dilapidated houses. Houses that but for Raineth would become a locus for crime. By turning vacant, dilapidated houses into safe, clean, affordable, and occupied houses, Raineth preserves neighborhood quality. Second, Raineth acquires most of its houses from small “mom & pop” landlords that have fallen into distress. Without Raineth, these undercapitalized landlords would continue the downward spiral of allowing their houses physically to deteriorate while renting to a revolving door of tenants. Dilapidated housing stock and high tenant turnover makes it difficult for neighborhoods to preserve a sense of community and enforce informal norms of conduct that are an essential part of a healthy community. Raineth acquires these distressed houses, rehabs them and rents them to a tenant it believes will stay in the house at least 3 to 5 years.

What happens when a tenant cannot pay their rent?

Low-income families generally face a great deal of stress. The last thing we want to do is add to that stress. We see eviction as an absolute last resort, and only if a tenant does not return our calls or communications when they have fallen behind in their rent. We regularly work with our tenants to set up a payment plan when they fall behind.

Would you allow the victim of domestic violence or stalking to break their lease?

We at Raineth Housing allow our tenants who face stalking or violence to break their leases without any penalty, because it’s the right thing to do. We do not evict tenants who are the victims of domestic abuse or stalking.

How many Raineth single family homes are in Kansas City?

Raineth has purchased nearly 500 homes in the Kansas City area and has restored more than 200 of them. The remaining houses will be restored within a year and will soon be available for rent at affordable prices.

How many Raineth single family homes are in the St. Louis area?

Raineth has purchased more than 800 homes in the St. Louis area and has restored more than 600 of them. We expect all the restorations to be completed and available for rent in the next 6 to 9 months.

How many Raineth single family homes are in Cincinnati?

Raineth has purchased nearly 330 homes throughout the city and has completed repairs on more than 285 of them. The remaining houses will be restored within a year and will soon be available for rent at affordable prices.

How does Raineth support the community?

It is important to us that we invest in programs that directly impact our tenants. Many of our tenants are single mothers raising children on a limited income. We are adopting classrooms in schools that serve our tenants and we participate in school supply drives that benefit families in our neighborhoods.

Are you shutting out families who wish to purchase the same homes you are buying?

Raineth rarely, if ever, purchased a house in which it competed against an owner-occupant in the bidding process. Raineth’s business model only makes sense if it can acquire houses at a steep discount to the retail market. For this reason, Raineth acquires houses that require significant repairs and that owner-occupants cannot buy because they cannot finance the rehab.

Are Raineth houses located in troubled neighborhoods?

Dilapidated housing stock and high tenant turnover makes it difficult for neighborhoods to preserve a sense of community and enforce norms of conduct that are an essential part of a healthy community. Raineth does not seek to invest in troubled neighborhoods, rather, Raineth buys into select, lower-middle income neighborhoods and preserves them. Vacant houses attract crime. By turning vacant, dilapidated houses into safe, clean, affordable and occupied houses, Raineth is preserving dozens of neighborhoods.

Wouldn’t it be better to see non-profit companies doing what Raineth does?

It would be better if more organizations of any kind does what Raineth does whether they are for-profit, non-profit or governmental. The cure for a lack of affordable housing is more affordable housing, and we at Raineth encourage everyone and anyone to lend a hand.

Since 1960, the proportion of cost burdened tenants has doubled from 24-percent to 48-percent. In other words, almost half of all tenants nationwide cannot afford their rent. As a result, these tenants cut back on healthy food and medical care. They work two jobs or increase their commute time. The result is that the children of these families get less healthy food, less medical care and less parental attention.

Federal and state governments are unable to solve this problem on their own. At no time over the last 35-years have as many as half the tenants eligible for government housing assistance of any kind received it. Moreover, each year the problem gets worse. Between 1993 and 2013, the number of very low-income households eligible for federal rental housing assistance grew by 3.8 million, bringing the total to 18.5 million. Over this same period, however, the number of government-assisted renters rose by just 532,000. Today only 26-percent of qualifying tenants receive assistance. Moreover, only very-low income tenants qualify for any form of government assistance. Many families are far too poor to afford housing but far too rich to qualify for assistance. In Raineth’s markets, families that make $25,000 a year neither qualify for most government housing assistance nor can they afford to pay more than $625 per month in rent. Nonetheless, the median rent is well over $800.

Non-profits cannot solve the affordability crisis on their own. Over 11 million American families spend more than 50-percent of their take-home pay on housing. Providing as little as a $100 per month rental subsidy to these families would cost $13.7 billion annually (exclusive of administrative costs). The non-profit sector devoted to housing lacks the capital to address a crisis of this magnitude.

Raineth is a for-profit business, and it is essential for it to remain so. America will only address its affordable housing crisis if it enlists the private sector. Raineth Housing believes that its pioneering business model can and will make a significant dent in America’s affordable housing crisis, reducing the stress housing unaffordability places on families and neighborhoods.

*, p. 30.

Throughout this page, all facts and figures come from Joint Center for Housing Studies of Harvard University, State of the Nation’s Housing 2018 (Harvard University 2018) and Joint Center for Housing Studies of Harvard University, America’s Rental Housing 2017 (Harvard University 2017).